The government of Alberta has introduced an Innovation Employment Grant (“IEG”) to complement its Job Creation Tax Cut (“JCTC”) in an effort to stimulate investment and expand opportunities in Alberta.
The IEG was first announced in the summer of 2020 and was confirmed in the 2021 budget released February 25, 2021. The IEG provides partial payments for eligible research and development (”R&D”) spending for corporations having a permanent establishment in Alberta. $166 million is available over the next three years through the Ministry of Jobs, Economy and Innovation.
The IEG provides a grant of 8% on a corporation’s base level R&D spending in Alberta in a given year, where the base level is calculated as the previous two years R&D spending in Alberta. R&D spending above the base level is eligible for an incremental 12% grant, for a total grant of 20%.
Up to $4 million in Alberta expenditures may qualify for the IEG. If a corporation has taxable capital between $10 million and $50 million, the grant is reduced on a straight-line basis; above $50 million the IEG is not available.
For start-up corporations relocating to Alberta, the entire R&D spending (up to the $4 million cap) may be eligible for the 20% grant.
The IEG applies to scientific research and experimental development carried out in Alberta effective January 1, 2021, using the same criteria for R&D expenditures as for Canada’s federal SR&ED program.